Materials have long propelled human affluence, driving rising living standards over the past (at least) 100 years, enhancing life expectancy and employment, as well as basic education levels. However, this progress has also come at a tremendous cost: the modern industrial economy is inherently linear—characterized by ‘take-make-waste’ processes in practice. (Circle Economy, Circularity gap report 2023)
Club of Rome – “The Limits to Growth” 1972: "Man can create a society in which he can live indefinitely on earth if he imposes limits on himself and his production of material goods to achieve a state of global equilibrium with population and production in carefully selected balance.”
Customer retention is a business’s ability to keep existing customers and continue to generate revenue from them.
Customers (or users) are at the center of any company. This is even more the case in a circular economy. A product is preferably designed with the user in mind and the customer receives a product at the moment it is most valuable. The product is in the hands of the user when the lifetime can potentially be extended through maintenance and ultimately, a customer has a deciding vote on what will happen to a product after it's first use.
Today, over 90% of the products that we use are disposed after the first use, or at best, recycled. As a consequence, almost all of the value that was created by these products is immediately destroyed; material recycling and waste-based energy recovery captures only 5 percent of the original raw material value.
In a circular economy, we should strive to keep these products at their highest value as long as possible. This means keeping materials in use, either as a product or, when it can no longer be used in that form, as components or raw materials. This way, nothing becomes waste and the intrinsic value of products and materials is retained.
“A big part of the problem lies with companies themselves, which remain trapped in an outdated,narrow approach to value creation.” Michael Porter, 2011
On a macro level, the business case for a circular economy is easy. Our current consumption patterns and growing population are not sustainable. We are exceeding the limits of our planet and causing climate change, biodiversity loss and ocean acidification while we are using all of our land and fresh water.
On an individual company level, this business case is less evident as most of the macro level effects are typically not taken into account. Nevertheless, when taking a true end-to-end view on a company’s activities, a circular approach is typically more attractive than the traditional linear approach.
To maximize the returns from circular practices, the main focus should be on the customer or user of the product. The positive effect that circular practices have on your customer relationship will make many circular business cases very attractive.
